George Hohmann: Health sector's challenges

CHARLESTON, W.Va. -- The state's health-care sector is expected to add 2,000 good-paying jobs over the next year but faces some challenges, said Tom Jones, president and chief executive officer of West Virginia United Healthcare System.

Jones was among the speakers Thursday at the 19th annual Economic Outlook Conference, presented by West Virginia University's College of Business and Economics at the Civic Center.

The organization Jones heads is the second-largest employer in the state (behind Walmart). Jones pointed out that Charleston Area Medical Center is the third largest employer, and that hospitals are typically among the two or three largest employers in most counties.

He said this important sector faces 10 challenges:

* The uncertainty of health-care reform. Will it be fully funded? Will the state choose to expand Medicaid? How will businesses respond to the reforms?

* West Virginia hospitals delivered $742 million in uncompensated care in 2010.

* Hospitals in West Virginia were paid $333 million under cost by Medicaid and PEIA in 2010.

* Declining reimbursements from Medicare and Medicaid.

* "Almost 75 percent of West Virginia hospitals lost money from operations in 2010."

* "West Virginia is the only state that regulates the rates of hospitals. I think if it worked, you would see other states doing it."

* A looming shortage of primary care providers. Jones said it is estimated that by 2020 there will be a shortage of 90,000 physicians across the country.

* Integration of health care providers. Under Obamacare, various health-care entities are supposed to coordinate their activities and emphasize wellness. "How do you get all of these people who are independent to work together?" he asked.

* Access to capital. Jones said that only two or three hospitals in the state now have a rating of "A" or better. The hospitals' aging facilities and their razor-thin operating margins means they will have difficulty raising money in the bond markets.

* Lack of vision. "We've failed to consolidate as banks, food stores, pharmacies and other industries have done," he said.

"I think there are a lot of positives -- the sector has good employers with good jobs," Jones said. "But there are a number of challenges. I think there will be a number of bumps in the road."

***

Steve McGowan of the law firm Steptoe & Johnson, a lifelong Boy Scout leader, told the economic outlook conference that to date the Scouts have a total of $250 million in commitments for the Summit Bechtel Family National Scout Reserve in Raleigh County.

"I don't think it will compete with the existing adventure market," he said. "Our market target is Boy Scouts and their families. I think it will be an 'all boats shall rise' situation."